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CHARTS OF THE WEEK-QUOTES-QUICK HITS

-CHART OF THE WEEK: The Epic Clash Between Bonds and Stocks Is Coming Back. It’s the latest chapter of the ever-raging battle between stocks and bonds. Treasury yields signal a brewing economic slowdown while equity bulls are cheering the business cycle. The schism is testing the mettle of investors mulling whether to ride or fade the $3 trillion new-year U.S. stock rally. The S&P 500 is on track for the best two-month run since 2010, fueled by the most economically sensitive sectors, even as 10-year U.S.

Treasury yields hover close to the lows plumbed during the recent global market meltdown. Growth angst is feeding haven demand for longer-dated debt, while the U.S. futures market prices in interest-rate cuts. In Europe, benchmark bund yields are trading close to the lowest in more than two years, at the same time that equities have climbed near a four-month high. It’s all adding to fears that the fast re-rating of stocks after the overwrought correction in 2018 has gone too far. Bloomberg

-CHART OF THE WEEK: Global Equities Still Better Value Than Bonds, Lazard Asset Says. Earnings growth will continue to underpin equity gains despite more frequent bouts of volatility and mounting risks for financial markets, according to Lazard Asset Management. The U.S. economy is in much better shape than investors believe and current market valuations suggest, Ronald Temple, co-head of multi-asset and head of U.S. equity at the $216 billion investment manager, told a conference in Sydney.

His main thesis is that U.S. jobs growth will remain buoyant for the next six to 12 months. “Investors should still be overweight global equities, but should be very focused upgrading the quality of what you own,” Temple told the Portfolio Construction Forum Markets Summit 2019. “I do still see a strong case for earnings growth to carry stock prices higher.” Investors should still be mindful of the risks from protectionism and Federal Reserve policy, he said. Bloomberg

-Monthly gains in January and February historically signal a 20% average market advance for the year. A market signal with a nearly perfect track record points to a strong year for stocks, according to S&P Dow Jones Indices. Twenty-nine out of 30 years of January-February gains resulted in an average yearly S&P 500 advance of 20 percent, says strategist Jodie Gunzberg. CNBC

-CHART OF THE WEEK: $1 Trillion Rally in European Stocks Looks in Danger to Analysts. The grand new-year bounce in European stocks is threatening to fizzle out, forecasters warn. The Stoxx Europe 600 Index is expected to lose 4.5 percent from Monday’s closing levels to 353 points by the end of 2019, according to the latest Bloomberg poll’s average projection. The Euro Stoxx 50 Index, home of the euro-area’s biggest companies, is seen declining 0.9 percent from current levels, according to the average survey estimate.

European stocks have enjoyed a stellar start to the year, adding about $1 trillion in market value since the Dec. 27 low, buoyed by a dovish U.S. Federal Reserve and optimism over a potential U.S.-China trade deal. However, many concerns that sent international markets tumbling late last year haven’t evaporated. Credit Suisse Group AG said on Monday that the global equity rally is nearing an end, cutting its recommendation for stocks to neutral amid such risks as declining profits, China and complacency about the Fed. Bloomberg

-CHART OF THE WEEK: Treasury Levels Seen as Danger by Templeton’s Desai. This year’s rally in Treasuries is an opportunity to sell or get short before the Federal Reserve signals more tightening in the second half of the year, according to Franklin Templeton. Expectations that the Fed’s next move will be a cut are mistaken, since the central bank’s forbearance in January largely reflected equity market conditions, Sonal Desai, chief investment officer for fixed income at Franklin Templeton Investments, said in a Bloomberg Television interview.

Gains in stocks and a strong economy mean the rally in bonds won’t hold, she said. Sovereign debt in the U.S. have gained in recent months as the Fed indicated it would be patient on hiking rates, with the yield on the 10-year Treasury bond falling almost 60 basis points from the 3.25 percent highs in November.”For anybody who takes this market pricing as fact, there’s danger there,” she said in Hong Kong. “Rather than buying, I’d be selling. I’d be looking for interesting places to put shorts on.” Bloomberg

-CHART OF THE WEEK: Goldman Pushes Back Against Pushback on Short-Dollar Call. Goldman Sachs Group Inc. is sticking to its guns in calling for the dollar to depreciate, despite criticism that its recommendation’s usefulness has come and gone. Goldman advised shorting the dollar in early January, accounting for the Federal Reserve’s pivot away from steady gradual increases in the benchmark interest rate. While the greenback indeed dropped thereafter, it has rebounded this month as other central banks adopted less hawkish stances of their own. Goldman says the dollar will fall anew. “One common pushback to this view is that, with the Fed shift now behind us, would it take another dovish surprise to push the dollar down from here?”

Michael Cahill, a Goldman economist in London, wrote in a note Wednesday. “We think not.” The Fed’s “dovish shock” is still set to reverberate, because policy maker sensitivities have fundamentally shifted, in Goldman’s view. Chairman Jerome Powell and his colleagues will probably be increasingly responsive to negative news, and be more relaxed about any need to react to positive surprises with tighter policy, the thinking goes. History shows the currency could still appreciate against this backdrop if the U.S. suffers “pronounced recession concerns” or global growth as a whole falls to “worrying levels,” triggering a haven bid for the greenback, Cahill wrote. A second key scenario is if American growth “significantly outperforms,” making the Fed’s perceived shift short-lived, he wrote. Bloomberg

-CHART OF THE WEEK: The Bank of Canada Might Not Be Done Hiking Just Yet. Investors wagering that the Bank of Canada is ready to throw in the towel on its tightening cycle are setting themselves up for disappointment, say market strategists at some of the country’s biggest banks. As policy makers around the world pivot toward a more dovish interest-rate outlook, front-end traders are betting Canadian officials are set to follow suit and forgo raising rates again until at least 2020. Yet analysts at firms including TD Securities and Scotiabank disagree, arguing that the BOC’s confidence in Canada’s economy suggests it isn’t ready to shift to a neutral stance just yet. No one is saying a rate hike is imminent.

In fact, most don’t expect officials to resume tightening until well into the second half of the year after economic data firm and oil prices stabilize. Yet a more-hawkish-than-expected BOC is still set to push up front-end yields, flattening Canada’s curve and narrowing the gap to similar-maturity U.S. Treasuries, according to Andrew Kelvin, a senior Canada rates strategist at TD. “Markets have erred too much on the side of a pessimistic outcome, because outside of the energy economy, things in Canada are not quite as dire as markets seem to be pricing,” Kelvin said from Toronto. “There is an inclination to tighten when the data allows the Bank of Canada.” Bloomberg

-CHART OF THE WEEK: Foreigners Dump Canadian Bonds at Record Levels. Canada ended 2018 with the biggest foreign investor exodus from its bond market on record amid global financial turmoil at the end of the year. Foreigners reduced their holdings of Canadian bonds by C$24.8 billion in December, the biggest one-month outflow in data going back at least three decades, Statistics Canada said Friday in Ottawa. Including other assets like equities and money market instruments, foreigners sold a net C$19 billion of all Canadian securities in December, the largest monthly divestment since October 2007. The large drop in December may have reflected issuers holding off for market volatility to subside, but 2018 was an overall weak year for foreign investment. Net foreign inflows in all securities were down by more than half last year to C$69.6 billion, the lowest since 2013. Bloomberg

-CHART OF THE WEEK: Montreal’s Real-Estate Market Is About to Eclipse Vancouver’s. Vancouver is on pace to lose its status as Canada’s second largest housing market to Montreal. While still Canada’s most expensive city for housing, a recent collapse in sales has led the value of real estate transactions substantially lower. That leaves Montreal’s soaring market poised to overtake the Pacific coast city’s. In January, the total dollar value of real estate transactions in Vancouver fell to C$1.7 billion ($1.3 billion) on a seasonally adjusted basis, the weakest level since 2013 and down 42 percent from a year earlier, according to data released Friday by the Canadian Real Estate Association. Meanwhile, the value of transactions in Montreal reached C$1.63 billion to start the year, an increase of 18 percent from last January. Montreal which has much cheaper homes, but more transactions hasn’t been this close to Vancouver since 2008. Montreal is the business capital of the largely French-speaking province of Quebec and Canada’s second largest city by population. But it was left out of the boom that saw home prices in Toronto and Vancouver surge to levels that made those cities unaffordable and prompted a rush of regulations to slow down them down. Bloomberg

-CHART OF THE WEEK: Central Bank Governor Tells Norway Not to Quit Oil Age Early. The central bank chief in western Europe’s largest producer of oil and natural gas is warning his fellow Norwegians not to prematurely kill the nation’s main economic engine and source of wealth. In his traditional annual speech to the nation’s political and business elite, Norges Bank Governor Oystein Olsen on Thursday said that the cost of exiting the oil age ahead of time would be “substantial” for the nation of 5.4 million people and have little effect in fighting climate change. “We may benefit from this industry for many years to come, because the world will continue to demand a lot of oil and gas,” said Olsen in an interview ahead of the speech.

“The oil price has recovered to a reasonable level, new projects are profitable, and I warn against making the period when we have the oil and gas industry as an engine and profitable source of income even shorter than necessary.” Olsen is wading into an increasingly tense debate in Norway over what do with a potential 52 billion barrels of oil and gas still estimated to lie offshore. The country has become one of the world’s richest nations since striking black gold in the 1960s, building the world’s biggest wealth fund. Now more than 10 percent of the population is directly or indirectly employed by the oil industry, according to Olsen. As the head of the nation’s $1 trillion wealth fund, he also pushed back at a growing chorus of politicians and activists seeking to micromanage its investments, especially on climate issues.

The governor said that the financial sector alone doesn’t have the tools to address the climate issue. “It’s doubtful whether defining emissions from sectors or individual businesses as unethical will make a difference,” Olsen said. “The responsibility for measures to combat global warming must rest with the authorities.” The fund is waiting to hear back from the government on a proposal to dump all its oil and gas stocks, not as a climate measure, but as way of protecting Norway as a whole against an overexposure to oil price risk. The fund is also struggling with implementing a climate criterion that was introduced in 2016 to cut the worst emitters of greenhouse gases. “To take a role where the oil fund is to be used as a means of fighting global warming, then I think it has gone too far,” Olsen said. Bloomberg

-CHART OF THE WEEK: Record High Name Government as Most Important Problem. Thirty-five percent of Americans name the government, poor leadership or politicians as the greatest problem facing the U.S. This is the highest percentage Gallup has recorded for this concern, edging out the previous high of 33% during the 2013 federal government shutdown. Read more here-http://bit.ly/2DRR21Q

-Fed sees balance sheet reduction ending, notes ‘risks and uncertainties.’ Minutes from the January Federal Reserve meeting reiterate the central bank’s new “patient” policy stance. The meeting summary also features extensive discussion of the Fed’s impact on markets. Officials said they expect to keep rates steady for now but left room for hikes later if conditions improve. CNBC

-The S&P/TSX Composite Index came within 63 points of closing above 16,000 yesterday. Last time that happened was in early October, likewise for hitting 16,000 on an intraday basis. The TSX is now boasting an 11.3 per cent gain so far this year, ranking it no. 8 among all indices tracked by Bloomberg. BNNBloomberg

-A recession indicator with a perfect track record over 70 years is close to being triggered. The unemployment rate is often called the most important barometer of a coming recession. Once the unemployment rate rises 50 basis points (or 0.50 percentage point) from its low, the economy was already in or heading for a recession, going back to 1948, according to Joseph Lavorgna, Natixis chief economist Americas. Lavorgna says there’s probably just a one in three chance of a recession and he expects the unemployment rate to head lower again, not higher. The unemployment rate, at 4 percent, is currently 30 basis points from its recent low. CNBC

-UBS faces a massive financial penalty in France after a court there ruled that the Swiss bank helped its wealthy clients avoid taxes. The court delivered its verdict in Paris on Wednesday, ordering the bank to pay €4.5 billion ($5.1 billion) and finding it guilty of money laundering and illegal client solicitations. The fines include €800 million ($907 million) in civil damages payable to the French state. Shares in UBS dropped sharply after the verdict was announced, trading down 4.2% in Switzerland. The fines are roughly equal to the bank’s net profits for 2018. CNNMoney

-This year, the money spent on digital advertising in the United States will surpass that on traditional ads for the first time, according to forecasts by eMarketer, representing a landmark inversion of how advertisers budget their resources and highlighting the rise of digital media as platforms to seek consumers’ attention. By the end of the year, eMarketer expects companies to spend nearly $130 billion on digital ads, compared with about $110 billion on traditional advertisements, or about 54.2 percent of the ad market vs. 46.8 percent, respectively. According to the research firm’s projections, spending on digital ads will continue to outpace that of traditional ads. By 2023, digital ads will capture more than two-thirds of all ad spending, according to the estimates. lmtonline.com

-CIBC Sees Canadian Dollar Falling to 15-Year Lows on Weak Exports. The Canadian dollar may need to fall to the lowest levels in at least 15 years to allow exporters to drive the nation’s expansion, according to CIBC Capital Markets. Given the limited scope of relying further on mortgage and consumer debt, Canada will need to produce better outcomes from exports and business spending to fuel growth, CIBC economists Avery Shenfeld and Royce Mendes said Tuesday in a report. But relatively weak productivity is hampering the nation’s businesses, making them higher-cost producers than their U.S. counterparts, they said.

The end result may be slower growth compared with the U.S., which will keep the Bank of Canada from raising rates as high as they are south of the border and lead to a weakening of the country’s currency. The Canadian dollar may need to fall below C$1.40 per U.S. dollar in order to make firms more competitive. “If that remains the case, we’ll either need a long period of underperforming wages and an even weaker Canadian dollar if trade is going to take the reins of growth,” Shenfeld and Mendes said. “Don’t be surprised to see dollar-Canada sport a 1.40 handle again in the next five years as the Bank of Canada is pressed to set interest differentials at a level that will give us the currency, we might need to bring exports back to life.”

Canada’s currency last traded consistently below C$1.40 against the greenback in the period between 1998 and 2003, when weak commodity prices pushed it to record lows. So far this year, the loonie has averaged about C$1.33 per U.S. dollar. CIBC predicts the currency will drop to C$1.36 by the end of 2020 before continuing its decline. The lender doesn’t publish actual forecasts beyond 2020. Contrary to CIBC’s call, many analysts expect the Canadian dollar to strengthen over the next year. The median estimate of analysts surveyed by Bloomberg News in recent weeks is for the dollar to average C$1.26 per U.S. dollar in 2020. Bloomberg

-I owe how much? Americans are shocked by the impact of Trump’s tax law. The first tax filing season under the new federal tax law is proving to be surprising, confusing and occasionally frightening for some Americans. It is especially so for those accustomed to getting tax refunds. Many Americans have come to rely on refunds: About three-quarters of U.S. taxpayers typically get one and they had averaged around $2,800. For some low-income households it is the biggest cash infusion of the year. CNBC

-The federal government collected a record $1,665,484,000,000 in individual income taxes in calendar year 2018, according to the Monthly Treasury Statements for the year, which the Treasury finished publishing today with the belated release of the December statement. Calendar year 2018 was the first full tax year after President Donald Trump signed the Tax Cuts and Jobs Act on Dec. 22, 2017. The previous calendar-year record for federal individual income tax revenues was in 2017, when the Treasury collected $1,656,171,550,000 in individual income taxes (in constant December 2018 dollars).

The real federal individual income tax revenues collected in calendar 2018 were $9,312,450,000 more than the real individual income tax revenues collected in calendar year 2017. At the same time the Treasury was collecting record individual income taxes, the federal debt was climbing from $20,492,746,546,193.75 at the close of 2017 to $21,974,095,705,790.55 at the close of 2018. That was a one-year increase of $1,481,349,159,596.80. Read more here-http://bit.ly/2XcW6Xf

-FBI’s Andrew McCabe feared he would be fired before Trump investigations were on ‘solid ground.’ Former FBI Deputy Director Andrew McCabe feared that he might be ousted before the obstruction-of-justice and counterintelligence investigations into President Donald Trump’s Russia ties were “on absolutely solid ground.” McCabe said that he launched the probes a day after speaking with Trump in May 2017, in a conversation following the firing of former FBI Director James Comey. Eight days after Comey was fired, special counsel Robert Mueller was appointed to carry out the investigations into Russia’s interference in the 2016 election. CNBC

-Justice Department officials discussed if Trump could be removed as president via 25th Amendment after firing FBI Director James Comey: Andrew McCabe. Justice Department officials discussed whether President Donald Trump could be removed from office by getting Vice President Mike Pence and a majority of the president’s Cabinet to invoke the 25th Amendment of the Constitution, former FBI deputy director Andrew McCabe has told CBS’s “60 Minutes.” Those discussions came on the heels of Trump’s firing of FBI Director James Comey. Comey’s firing led to the appointment of special counsel Robert Mueller. The special counsel is investigating whether Trump’s presidential campaign colluded with Russian interference in the 2016 election, and whether Trump obstructed the Justice Department’s earlier inquiry into that question. CNBC

-Putin threatens to target US if it deploys missiles in nearby European countries. Putin, in his annual address to parliament, says his country would not seek confrontation and would not take the first step in deploying missiles after the suspension of the Intermediate-range Nuclear Forces Treaty. However, he says Russia would respond to any deployment of new intermediate-range missiles in Europe by targeting the United States itself and not just the countries where they are deployed, according to a Reuters translation. He says he would field new weapons that would target U.S. decision-making centers. CNBC

-Retail sales were so bad, it’s either suspect data or a recession warning. Retails sales plunged 1.2 percent in December, shocking economists who expected a 0.2 percent gain. The report immediately raised new fears of recession, but economists said the report is also so negative against other more positive data, that it appears suspect. Even so, economists are slashing fourth quarter GDP growth estimates, and also keeping a wary eye on jobless claims, which showed a slight increase for a third week in a row. The drop in sales raised new concerns about the consumer, which accounts for more than two-thirds of the economy. CNBC

-Holiday sales were a huge disappointment, retail report says. Shoppers didn’t spend as much as expected this past holiday season, according to a new report from the National Retail Federation. NRF says holiday sales were up just 2.9 percent. It was expecting sales from Nov. 1 through Dec. 31 to rise as much as 4.8 percent. CNBC

-Payless ShoeSource files for bankruptcy as it closes its 2,500 US stores. Payless ShoeSource has filed for bankruptcy protection. It has already begun to close down its 2,500 stores across the U.S. The retailer expects all stores to remain open until at least the end of March, and the majority until May. CNBC

-Payless ShoeSource Canada Inc. says it will soon file for creditor protection in Canada and close all 2,500 of its North American stores this spring. The Kansas-based company’s chief restructuring officer Stephen Marotta says in a release that the closures are happening because a prior reorganization left the company “ill-equipped” for today’s retail environment with too much remaining debt and too large a store footprint. GlobalNews

-Amazon says it will not build a headquarters in New York. Amazon announced Thursday it will not build its headquarters in New York City after local opposition. The company had originally planned to build the campus in the Long Island City neighborhood of Queens. The Washington Post had first reported last week that executives were considering backing out of the plans to build an office in New York. New York Gov. Andrew Cuomo had warned that local and regional leaders would have to answer to voters if Amazon did not ultimately bring its 25,000 jobs to the state. CNBC

-New York will lose the bulk of the 25,000 jobs that were promised by Amazon HQ2. New York City will lose the bulk of the 25,000 jobs that were initially promised by Amazon’s HQ2, the company’s spokesperson confirmed. Instead, most of those jobs will be spread across 17 of Amazon’s corporate offices and tech hubs in North America, including Boston, Vancouver and Denver. Amazon announced Thursday it will not build its headquarters in New York City after local opposition. The company had originally planned to build the campus in the Long Island City neighborhood of Queens. CNBC

-Charlie Munger says California, Connecticut have been ‘stupid’ for driving rich people away. “It’s been serious. Driving the rich people out is pretty dumb if you’re a state or a city,” Munger tells CNBC’s Becky Quick in an interview. “There are a number of places that have shot themselves in the foot; Connecticut, California, New York City.” “I think it’s really stupid for a state to drive the rich people out,” he says. “They are old, they keep your hospitals busy, they don’t burden your schools, police departments or prisons. Who wouldn’t want rich people?” CNBC

-Even for this Gilded Age of 0.0001 percenters, Kenneth Griffin drips money. The hedge-fund mogul recently closed on a New York penthouse for an eye-watering $240 million. Before that he picked up a $122 million London mansion. He can hang his $200 million Pollock in one and his $300 million de Kooning in the other. Remarkably, all of that cost less than what Griffin made in 2018, when his personal fortune swelled by $870 million to about $10 billion, according to the Bloomberg Billionaires Index, a ranking of the world’s 500 richest people.

More remarkable is how Griffin and many other hedge fund giants mint so much money: with investment returns that are solid, but a far cry from John Paulson‘s mammoth housing short or when George Soros broke the Bank of England. The Bloomberg Billionaires Index’s inaugural ranking of hedge-fund wealth lays bare a truth about the business that, for many, defines what it means to be rich. Outfits like Griffin’s Citadel and Ray Dalio‘s Bridgewater Associates have grown so big by assets that they’ve effectively become printing presses for their ultra-rich owners. The largest funds can now throw off millions or billions of dollars a year in fees. Bloomberg

-JP Morgan is rolling out the first US bank-backed cryptocurrency to transform payments business. Engineers at the lender have created the “JPM Coin,” a digital token that will be used to instantly settle transactions between clients of its wholesale payments business. Only a tiny fraction of payments will initially be transmitted using the cryptocurrency, but the trial represents the first real-world use of a digital coin by a major U.S. bank. While J.P. Morgan’s Jamie Dimon has bashed bitcoin as a “fraud,” the bank chief and his managers have consistently said blockchain and regulated digital currencies held promise. CNBC

-The U.S. warned that the danger of cyber attacks isn’t taken seriously enough by the general public after NATO allies discussed online threats at a meeting in Brussels. “The difficulty that we face is there isn’t alignment with the public on threats,” Acting U.S. Defense Secretary Patrick Shanahan told reporters on Thursday after a two-day ministerial meeting at the North Atlantic Treaty Organization. “I am referring to Russia, I am referring to China, I am referring to the evolving situation, infrastructure, cyber-security, space.”

The discussion of cyber threats among NATO’s 29 ministers came as the U.S. is increasing pressure on European allies to not partner with Chinese tech giant Huawei Technologies Co. for the roll-out of their next generation of networks, known as 5G. European Union governments, meanwhile, are considering a possible joint response to cyber attacks allegedly conducted by a Chinese state-linked hacker group. NATO Secretary General Jens Stoltenberg said on Wednesday that the alliance takes seriously reports from allies about their concerns over Chinese activity related to infrastructure and cyber issues. Bloomberg

-Is the world’s most expensive painting a fake? Louvre snubs ‘Leonardo da Vinci’ painting 15 months after a Saudi prince spent 450 million on it as art experts suggest it may have been painted by his assistant. The Salvator Mundi was thought to be painted by Renaissance master Leonardo da Vinci, but doubts have been cast over the painting’s authenticity. The painting, which was unveiled at The National Gallery’s 2011 Leonardo exhibition, broke auction records at Christie’s in New York, 2017 when it was bought for $450million.

Christie’s confirmed the Abu Dhabi Department of Culture and Tourism was ‘acquiring’ the painting, but its next unveiling, due to take place at the Louvre Abu Dhabi in September, was cancelled with no explanation. The Salvator Mundi, which depicts Christ as ‘Saviour of the World’, is now alleged by some to be a ‘workshop Leonardo’, painted by one of the artist’s studio assistants. Read more here-https://dailym.ai/2V7wDNc

-Self-Driving Cars Might Kill Auto Insurance as We Know It. Without humans to cause accidents, 90% of risk is removed. Insurers are scrambling to prepare. Dan Peate, a venture capitalist and entrepreneur in Southern California, was thinking of buying a Tesla Model X a few years ago until he called his insurance company and found out how much his premiums would rise. “They quoted me $10,000 a year,” Peate recalled. Bloomberg

-A $1 Million Car? Here Are 11 of Them. Once super rare, supercars have multiplied since the global financial crisis, and today there are more crazy-fast crazy-expensive road rockets than ever. With their cutting-edge technology, race-inspired design, and high-end materials, the cars are equal parts engineering and artistry and as such, frequently spend far more time in collectors’ garages than on roads or tracks. And because they’re often sold before the first metal is bent or screws are turned, prices for secondhand models can be almost twice what they cost new. Here are some currently being made. Bloomberg

-Rare L.A. mega-storm could overwhelm dam and flood dozens of cities, experts say. Scientists call it California’s “other big one,” and they say it could cause three times as much damage as a major earthquake ripping along the San Andreas Fault. Although it might sound absurd to those who still recall five years of withering drought and mandatory water restrictions, researchers and engineers warn that California may be due for rain of biblical proportions or what experts call an ARkStorm. Read more here-https://lat.ms/2GBUrpg

-A new poll reveals that 53% of California residents are considering leaving the Golden State because of the high cost of living. The “Trust Barometer” poll, by Edelman Intelligence, was conducted January 4-20 among 1,500 California residents, with a margin of error of 2.5%. A special oversample of 400 tech workers in the San Francisco Bay Area was also conducted, with a margin of error of 4.8%. The results are sobering. Nearly two-thirds, 62%, of respondents said they believed the best days of California were in the past. Read more here-http://bit.ly/2Xc75As

-Residents of Las Vegas saw snow on Sunday night for the second time this month and the third time overall this winter. A trace of snow was officially reported at McCarran International Airport late Sunday, but other parts of the valley saw a dusting to an inch or two of snow. The last time the airport had snow on multiple days in February was 1987. Snow was once reported on as many as five days in February 1949. Other years with snow on multiple days in February include: 1939, 1955, 1960, 1979 and 1985. Prior to this winter, the last time a trace of snow was reported at McCarran International Airport was Christmas Day 2015. The last measurable snow (at least 0.1 inches) there was on Dec. 17, 2008, when 3.6 inches was observed. Read more here-https://wxch.nl/2S9fKQk

-Former San Francisco 49ers quarterback Colin Kaepernick agreed to quietly settle his lawsuit accusing the National Football League of colluding to prevent him from securing a contract as a free agent. Two seasons ago, Kaepernick started to kneel rather than stand during the national anthem before games as a protest against police brutality and racial injustice. He filed a grievance against the NFL in November 2017, saying he had been retaliated against by NFL owners for his political stance. Last year he defeated a bid by the NFL to dismiss his case. The settlement is confidential and there won’t be further comment by any party, Kaepernick’s lawyer, Mark Geragos, said Friday in a statement posted on Twitter. The former quarterback hasn’t played in the league during the past two seasons. Eric Reid also settled his collusion case against the NFL, according to Geragos’s statement. Bloomberg

-The Los Angeles Clippers, owned by former Microsoft Corp. Chief Executive Officer Steve Ballmer, signed a partnership with Amazon.com Inc.’s cloud business as the billionaire seeks to reimagine how fans watch sports in a world of cord-cutters and legalized sports betting. Ballmer said, yes, it was awkward cutting a deal with Microsoft’s biggest rival. He went with Amazon Web Services because it provides the computing power behind CourtVision, a video technology the Clippers are using to develop a mobile app that may “transform the consumer experience.” Bloomberg

-Machado agrees to 10-year, $300M deal with Padres. Manny Machado picked a good year to hit the open market, posting career highs in home runs (37), RBI (107) and OPS (.905) in 162 games split between the Baltimore Orioles and Los Angeles Dodgers after a trade just prior to the deadline. TSN

RARECOLOREDDIAMONDS.COM

-Rare 88ct. Diamond to Lead Sotheby’s Hong Kong. A flawless white diamond with a high estimate of nearly $13 million will head up April’s Magnificent Jewels and Jadeite auction at Sotheby’s in Hong Kong.

The oval brilliant-cut, 88.22-carat, D-color, flawless, type IIa stone is one of only three oval diamonds over 50 carats offered in auction history, Sotheby’s said Tuesday. The stone which has a presale estimate of $11.2 million to $12.7 million is the largest to go under the hammer in more than five years. “For those who have had the chance to see the diamond, one adjective comes back: ‘breathtaking,'” said David Bennett, worldwide chairman of Sotheby’s international jewelry division. “Barely any diamonds of this weight are known to possess the same exceptional qualities of purity and perfection as this remarkable stone, which is so full of fire and blinding brilliance.” The diamond comes from a 242-carat rough stone recovered from De Beers’ Jwaneng mine in Botswana, and took several months to cut and polish, Sotheby’s added. Read more here-http://bit.ly/2V8uAZq

-Graff To Unveil A Watch Paved With 60 Fancy Yellow Diamonds At Baselworld. For the upcoming Baselworld watch and jewelry trade fair, Graff will unveil an important collection of jeweled watches, each showcasing diamonds using what the company describes as “pioneering jewelry watchmaking skills.” The first watch in the collection was unveiled Tuesday with the entire piece paved with 60 fancy vivid yellow diamonds totaling more than 25 carats. The price of the watch was not released. Read more here-http://bit.ly/2XhsnfM

GOLD-SILVER-PALLADIUM

Gold to silver ratio at 80 to 1 with gold at $2,000 the silver price would be $25.00

Gold to silver ratio at 70 to 1 with gold at $2,000 the silver price would be $28.57

Gold to silver ratio at 60 to 1 with gold at $2,000 the silver price would be $33.33

Gold to silver ratio at 50 to 1 with gold at $2,000 the silver price would be $40.00

Gold to silver ratio at 40 to 1 with gold at $2,000 the silver price would be $50.00

Gold to silver ratio at 30 to 1 with gold at $2,000 the silver price would be $66.67

Gold to silver ratio at 20 to 1 with gold at $2,000 the silver price would be $100.00

Gold to silver ratio at 15 to 1 with gold at $2,000 the silver price would be $133.33

-Palladium Smashes $1,500 as Shortages Ignite Record-Breaking Rally. Palladium surged above $1,500 an ounce to a record, extending a powerful rally that’s been driven by an acute shortage of supply as car manufacturers scramble to get hold of the material to meet stringent emissions controls. Spot palladium surged as much as 1.7 percent to $1,505.46 an ounce, and traded at $1,488.20 at 10:08 a.m. in New York. Prices are set for a seventh straight monthly gain. The advance will benefit top suppliers in Russia and South Africa.

In other precious metals, gold rallied to a 10-month high, while silver and platinum both climbed. Palladium, a silvery-white metal used to curb emissions from gasoline-fueled vehicles, has tripled since January 2016. Citigroup Inc. said this month that further gains may be in store, warning the market will only balance with a shock to demand. Prices may hit $1,600, the bank forecasts. The global deficit looks set to “widen dramatically” this year, according to Johnson Matthey Plc, a leading maker of autocatalysts. BlackRock Inc.’s Evy Hambro told Bloomberg TV this week that a “massive shortage” has built up as the auto market moves away from diesel-powered vehicles.

“Until you get an increase in supply coming onstream, which isn’t going to happen for a few years yet, this is going to result in a tight market and prices generally trending higher,” Philip Klapwijk, managing director of Hong Kong-based consultant Precious Metals Insights Ltd., said on Wednesday. Tighter supplies of palladium, used mainly to curb emissions in gasoline vehicles, have spurred a robust borrowing market for the metal, prompting investors to pull the material from exchange-traded funds and offer them for lease. Heraeus, a refiner, said physical palladium ETF holdings fell to 700,000 ounces at the end of 2018, down from a peak of 2.9 million in 2014.

It’s hard to gauge the exact level of global stockpiles, but various sources have estimated a range between 10 million and 18 million ounces, which equates to roughly one to two years of demand, Heraeus said. Still, some analysts are questioning the durability of the rally. Car sales in China continued to drop in January after their first full-year slump in more than two decades. Plus, markets in Europe and North America are shrinking as ride-hailing and car-sharing services make it less necessary to own a vehicle. Tighter emissions rules are “outweighing the weakness in global auto sales and the growing threat from EVs,” said Matthew Turner at Macquarie Group Ltd. “So while we’ve known about deficits and projected deficits for years, the market’s ability to adjust to them is unusually constrained.” Bloomberg

-Johnson Matthey: Palladium supply shortfall will worsen this year. A deficit in the palladium market that has driven prices of the autocatalyst metal to record highs will widen dramatically this year, specialist materials company Johnson Matthey said in a report on Wednesday. The company, a leading autocatalyst manufacturer, said the shortfall in the roughly 10 million ounce-a-year palladium market narrowed in 2018 to 29,000 ounces from 787,000 ounces in 2017, its widest in three years. But it said stricter emissions standards would increase demand for palladium for catalytic converters, and despite an increase in recycling, supply would struggle to keep up. “The rate of growth in secondary supplies is likely to be lower than in 2018, while primary shipments (of newly mined metal) are expected to be flat,” the report said.

Palladium-backed exchange-traded funds (ETFs) would no longer be able to bridge the gap between supply and demand by returning metal to the market, it added. ETF holdings have fallen to around 750,000 ounces from more than 2.5 million ounces in 2015. Palladium prices have surged by around 70 percent in the last six months to record highs above $1,400 an ounce, while platinum, once the most expensive of the major precious metals, is stuck near 10-year lows around $800 an ounce. For platinum, Johnson Matthey said the roughly 8 million ounce-a-year market was oversupplied by 498,000 ounces last year, up from 176,000 ounces in 2017, and another surplus was expected this year. Platinum is also used chiefly in autocatalysts, as well as in industry and to make jewellery.

It is used more in diesel engines, which have become less popular since Volkswagen was found have cheated emissions tests in 2015, pushing down platinum demand. Johnson Matthey said it expected that trend to reverse this year. “Autocatalyst consumption will stabilise and then begin to rise in due course, as stricter heavyduty vehicle emissions legislation is enforced in China and then India,” it said. Demand from industry, which has grown in recent years, would stay around last year’s levels in 2019, while consumption for jewellery would likely remain weak after several years of declines, it said, predicting that mine supply would remain flat and there would be a slight increase in recycling. Reuters

-When trouble strikes, where should you hide? The case for gold. Imagine you have an assignation in New York. You have not been told where you should meet the other person and she has not been told where to meet you. You have no understanding of where to find her or where she might usually be found. She is as ignorant of you. You cannot communicate. You must somehow guess how to find each other and make those guesses coincide. Where should you go? And at what time of day? A good answer is Grand Central Station at noon. That was the response of the majority asked by Thomas Schelling, a game theorist and Nobel prizewinner in economics, in experiments reported “The Strategy of Conflict”, published in 1960. People are often able to act tacitly in concert if they know that others are trying to do the same, said Schelling. Most situations throw up a clue, a “focal point”, around which to co-ordinate, even if it takes imagination as much as logic to find it. Read more here-http://bit.ly/2TXlz5h

-Dennis Miller: Will Gold Shine In 2019? Several experts, who are not in the gold business, recently suggested gold will be a good investment in 2019. Zerohedge reports on David Einhorn’s annual letter to Greenlight Capital shareholders with my emphasis: “Gold Long U.S. debt to GDP is over 100%. The U.S. debt has increased by over $2 trillion. When the economy eventually slows, the deficit is sure to expand rapidly, possibly catastrophically. The politicians say deficits don’t matter.

History says otherwise. Gold continues to be a hedge in our portfolio to imprudent global fiscal and monetary policies.” The Aden Forecast, a highly respected newsletter, tells us: “GOLD’S TURN TO SHINE This too will likely continue this year, especially if the U.S. dollar also heads lower. If so, gold will get a double boost and it’ll shine as the world’s safe haven. For a number of reasons, we believe that’s what’s coming up. Already, gold hit a 6½ month high, mostly thanks to its safe haven status during these volatile times.” Read more here-http://bit.ly/2XdmzUE

-The Perth Mint Has Recast This Gold Bar More Than 65,000 Times. In 2018, it sold about $13.3 billion in pure gold, silver, and platinum. Seven times a day, the Perth Mint hosts a public gold pour at its downtown location in the Western Australian city. A 14-pound gold bar is melted at 1,945F (1,063C) in a crucible made of clay and graphite. The liquid is then poured into a cast-iron mold, where it hardens into a bar in about 90 seconds. It needs an additional 15 seconds from the time it’s placed in a quenching tank filled with tap water until the bar is “cool to the touch,” Chief Executive Officer Richard Hayes says. The same gold bar has been melted and cast more than 65,000 times since the mint opened its doors to visitors in 1993, Hayes says. In that time, it has been worth as little as $51,000 in 1999 to as much as $390,000 in 2011. At a price of $1,310 an ounce on Feb. 14 the bar was worth about $267,000. At the end of each day, it’s stored in one of the mint’s vaults. Bloomberg

-Hedge Funds Coming Off Record Short Could Boost This Gold Rally. Gold’s rally could have further to run if hedge fund managers ramp up bullish bets after last year’s extended big short. The metal soared to a 10-month high of $1,346.80 an ounce on Wednesday as a mounting chorus warn of an imminent slowdown in global growth yet, the fast money has largely missed this uptrend. On the heels of their record short, money managers remain only modestly allocated to the metal, according to futures positioning data from the end of January, delayed by the recent U.S. government shutdown.

“Despite a more positive attitude, investors have not piled into gold, aggressively chasing the market,” Joni Teves, a strategist at UBS Group AG wrote in a note. “Reluctance lingers, and the risk is that with many market participants waiting to buy dips, there could be a lot of catching up to do if positive catalysts extend.” Heavyweight commodity analysts like those at Societe Generale SA have recommended buying both gold and miners this year, saying the metal should “break free” in 2019 amid a scarcity of havens. A dovish Federal Reserve and central-bank buying are also providing bulls with fodder. Last year the bears ran wild, as hedge funds and other large speculators built up the biggest-ever net-short position in gold futures and options, according to U.S. Commodity Futures Trading Commission figures going back to 2006.

They were betting that gold would remain under pressure as investors favored the dollar as a haven asset during the U.S.-China trade war. Not everyone believes the fast money has a reason to go all-in just yet. “You get a reverse snowball effect in gold rallies, the higher it goes, the more it attracts fund money,” said David Govett, head of precious metals trading at Marex Spectron Group in London. “But overall, the stock market is firm, and I doubt the dollar comes back that much more, so I think the upside is limited on this move.” Bloomberg

-Bernstein Quants Join Bulls on Gold Sector as Cycle Darkens. For all the attention lavished on gold for its relative durability during this global dash into risk, the real story could be the companies digging it out of the ground. A growing chorus of big names including everyone from the quants at Bernstein to Pictet’s multi-asset team is turning increasingly bullish on miners as late-cycle angst and industry shifts make conditions ripe for a prolonged rally. Mining shares have gained at more than twice the pace of bullion this year, even as the metal hit a 10-month high on Tuesday, and the evidence suggests they can outperform the physical metal in an economic slowdown.

Over the last 10 years, they traded with a correlation of 0.8 and a beta of 1.8 compared to gold. That means the two moved in lockstep, but when gold rallied investors who bet on miners were rewarded with a return about 80 percent larger. At Bernstein, quantitative strategists led by Inigo Fraser Jenkins are seeing a laundry list of reasons to like gold and gold miners just now. They’re adding both, but see a tactical case for shares of metal producers in particular. “One of the key strategic themes that underlies our outlook is that we think there is a low return outlook across asset classes,” the strategists wrote last week.

“The practical issue of holding gold is the lack of yield, or an ability to value it in a conventional way. So for portfolio managers of equity and multi asset portfolios an attractive alternative might be to hold the equity of gold miners.” The growing interest in gold and associated assets comes at a critical time for global markets. Equities and debt have been surging in 2019 as investors chase late-cycle gains, but the rally has been laced with doubt as economic data increasingly points to a global slowdown. Heavy-weight commodity analysts like those at Societe Generale have recommended buying both gold and miners this year, saying the metal should “break free” in 2019 amid a scarcity of safe havens. Bloomberg

-Hochschild Mining halts Peruvian mine on low silver prices. Precious metals miner Hochschild Mining has been forced to halt operations at its Arcata gold and silver mine in Peru, saying that low silver prices had left the company little choice aside from suspension. Hochschild, which operates three mines in southern Peru and one in southern Argentina, said Arcata would be on “full care and maintenance” by the second quarter of 2019. “This decision has been expected but is still disappointing for the organization but the continuing low silver price over some years and current geological conditions leaves us no option,” chief executive officer Ignacio Bustamante said in a statement.

Spot silver prices have gained as much as 15% since bottoming out in November. But while the metal is currently trading at around $15.70 per ounce, prices have been on a steady downward path since peaking above $20 per ounce in June 2016, partly due to slower industrial demand. Hochschild will continue exploration work at Arcata, its first mining operation dating back to 1964, and will regularly review market conditions for a potential restart of operations. The mine, located in Arequipa, southern Peru, produced an estimated 6,250 koz of silver and 20 koz of gold in 2018. Read more here-http://bit.ly/2T9ayAk

-A New Silver Issue for the Justice Department. It’s now been four months since the US Department of Justice secured a criminal guilty plea from the former trader from JPMorgan for spoofing and manipulating precious metals prices on the COMEX and three months since that plea was unsealed. In its announcement on Nov 6, the Justice Department made it clear that it was engaged in an ongoing investigation into COMEX precious metals trading by no less than three of its important divisions; the Criminal Division, the Federal Bureau of Investigation (FBI), and the US Attorneys Division. Here’s a link for the organization chart for the DOJ https://www.justice.gov/agencies/chart. While it’s no small matter for suspected criminal activity to be pursued by three separate divisions within the Justice Department, yesterday’s release of the (still delayed) Commitments of Traders (COT) report for positions as of Jan 15, indicates yet another important division of the DOJ should be involved in the current investigation the Antitrust Division.

Incontrovertible evidence in yesterday’s COT report indicates serious violations of monopoly and restraint of trade issues in COMEX silver futures. This is not a “new” issue, in that I have continuously raised it over the years, but yesterday’s COT report indicates it is imperative for the Antitrust Division to consider the matter in light of the current COMEX precious metals investigation already underway. That issue is the concentrated holdings of the 4 and 8 largest traders on the short side of COMEX silver futures. As of the close of business on Jan 15, the 8 largest traders on the short side of COMEX silver futures held a net (pure) short position of 95,577 contracts, the equivalent of nearly 478 million ounces of silver, or roughly 60% of annual total mine production. The 4 largest traders held a net short position of 70,627 contracts, the equivalent of more than 350 million ounces or roughly 40% of total annual world mine production.

In terms of the average short holdings of each trader; the 4 largest traders average more than 87 million ounces per trader, while the 8 largest traders hold short nearly 60 million ounces per trader. No silver mining company produces 60 million ounces per year. Moreover, silver prices traded flat to lower over the reporting week, finishing at $15.62. That represents a price barely at or even below the cost of production for a primary silver miner, so the thought that silver miners were rushing to sell short and hedge production is absurd. Besides, mining companies have to disclose such dealings separately and no such filings have been reported. There can be little doubt that the one-week increase in the concentrated short position of the 8 largest traders of 4935 contracts (nearly 25 million oz) was strictly the work of speculating banks masquerading as legitimate commercials. Read more here-http://bit.ly/2GytrqO

-‘Flash Boys’-Style Speed Bump Planned for Futures Markets. Intercontinental Exchange Inc.‘s futures market wants to join the battle against the fastest traders. The Atlanta-based exchange plans a 3-millisecond trading delay, or speed bump, for its gold and silver futures contracts, according to a regulatory filing. The U.S. Commodity Futures Trading Commission on Wednesday asked for public comment on the proposal. Michael Lewis’s 2014 book, “Flash Boys,” popularized the idea of using speed bumps to curb the light-speed pace of modern financial markets and prevent alleged abuses of so-called high-frequency traders.

Lewis’s protagonists, the founders of IEX Group Inc., introduced a delay on their stock exchange in 2016, and a tiny equities market ICE owns, NYSE American, also has one. But this latest move would bring a speed bump to derivatives markets. The delay would be introduced “initially” for gold and silver, areas where ICE currently does very little business. An ICE spokesman declined to say whether it would later be applied to other markets. ICE is a leader in other products such as oil futures. Three milliseconds, or 0.003 seconds, is about four times longer than a baseball stays in contact with a bat when hit. It’s a long time in this computer-driven era of trading, almost 10 times longer than the speed bumps used by IEX and NYSE American.

Time stamps on trades are often given in nanoseconds, and there are a billion of those in a single second. The delay could prevent the fastest traders from picking off stale quotes in ICE’s order book. The exchange’s rival, Chicago-based CME Group Inc., dominates the metals market. When gold and silver prices move at CME, the ICE speed bump could protect its customers. “This short delay helps level the playing field by giving all traders who have placed a resting order additional time to react to price changes in related markets,” according to the exchange’s filing with the CFTC. Bloomberg